Citi banks analyst, Brendan Sproules, says rising US 10-year bond yields should provide strong support for banks relative to the market in FY22, albeit valuations are "full".
"Valuations are looking full in absolute terms, but the prospects of higher rates and
revenues beyond the 12 month ‘transition’ period look attractive," he says.
"In the near-term, a sustained move higher in the US 10 year bond yield is likely to continue to dominate relative performance versus the broader market.
NAB has provided the best execution and outlook, but is priced for such, and remains Neutral rated, along with ANZ.
Westpac earnings improvement looks a "mid-FY23 story" but remains a Buy on valuation and "for the patient investor, WBC’s upside is the best in the sector."
His new order of preference is WBC, NAB, ANZ and CBA which is his only Sell.
WBC Price at posting:
$22.79 Sentiment: Buy Disclosure: Held
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